The government has now officially released details of the £60 billion mini-budget naming it a ‘new era’ to provide help to businesses struggling with the cost-of-living crisis, and aiming to, it says, incentive domestic and foreign business investments in the UK through different tax cuts and other measures.
As always, we expect further specific details to be released in the coming days and weeks, but here is a summary of what has been announced:
- Reversal of last April’s increases in National Insurance and dividend taxes. This will take into effect from 6th November.
- Income Tax – from April 2023 we’ll see 1% reduction in the basic rate of tax (down to 19%). This has previously been announced but has been brought forward a year. This change will save taxpayers up to £377 a year depending on their income. (For our Scottish clients of course Income tax bands are different, where the basic rate is 21% and the additional rate remains at 46%.)
- Single Higher Tax Rate – From April 2023 there will only be a single higher income tax rate of 40%, removing the 45% rate (for tax payers earning above £150,000) to ‘simplify the tax system’. (Of course, for our Scottish Clients – Income tax bands are different, where the basic rate is 21% and the additional rate remains at 46%.)
- There will be no VAT for overseas visitors shopping in the UK.
- Stamp Duty cut in England and Northern Ireland – With immediate effect, first time buyers will now not pay stamp duty tax before £425,000, previously £300,000. The value of the property on which first time buyers claim relief has been raised from £500,000 to £625,000. The rates for Scotland and Wales remain the same. Stamp Duty now looks like this:
- £0 – £250,000 (£425,000 for first time buyers) = 0%
- £250,000 – £925,000 = 5%
- £925,000 – £1,500,000 = 10%
- £1,500,000+ = 12%
- Employers National Insurance – The 1.25 percentage point rise which has been in place since April 2022 has been reversed, this will take effect from 6 November 2022.
- Corporation Tax (CT) – The planned rise from 19% to 25% has been cancelled
- Contractors will see a repeal the 2017 and 2021 changes to IR35 rules – more information on what this will actually means to follow.
- Investment Zones – Certain areas of the UK to have taxes cut and less red tape to increase production.
- No employers NI for employees earning less than £50,000
- No SDLT
- No business rates
- Energy Bill Relief Scheme (EBRS)– include an automatic relief for businesses where discounts will be applied to energy usage between October 2022 and 31 March 2023. The EBRS applies to England, Scotland and Wales, and Northern Ireland will have a similar scheme. The government-supported price has been set at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.
- Annual Investment Allowance (AIA) will remain at £1,000,000, was due to decrease to £200,000 in April 2023.
As soon as the full information is released by the government, we will be updating this blog. If you currently need help implementing the new changes to your business, your local AIMS Accountant will be able to help.